The AUD/USD gained 0.48% on Tuesday, ending the session at $0.68241. This positive performance comes after the Australian dollar fell to a low of $0.67913 earlier in the day before rising to a high of $0.68270. The rise in the AUD/USD suggests that investor sentiment towards the Australian dollar has improved.
On Wednesday, industrial profit numbers from China will garner investor interest. Weaker year-over-year figures could impact the buyer appetite for the Aussie dollar. This is because weaker numbers would signal a weakening demand environment, which in turn could impact the Australian economy. It is important to note that China accounts for one-third of Australian exports.
Australia has a trade-to-GDP ratio exceeding 50%, highlighting its dependency on international trade. Additionally, 20% of the Australian labor force is employed in trade-related jobs. Therefore, any developments in the global market, particularly in major trading partners like China, can have a significant impact on the Australian economy and its currency.
Richmond and Dallas private-sector numbers for December will also draw investor interest. Better-than-expected figures will raise bets on a soft landing for the US economy. Economists forecast a slight decrease in the Richmond Fed Manufacturing Index, while the Richmond Fed Services Index is expected to remain steady. The Dallas Fed Services Index, on the other hand, is predicted to rise slightly. However, these numbers are unlikely to significantly impact expectations of a rate cut by the Federal Reserve in Q1 2024.
The near-term trends of the Australian dollar will likely hinge on economic indicators from China and the US economic calendar. A pickup in economic activity in China and rising bets on a Fed rate cut would be positive for the Aussie dollar. Currently, the AUD/USD remains above the 50-day and 200-day EMAs, which are sending bullish price signals. If the AUD/USD reaches $0.68500, it could trigger a bullish move towards the $0.68944 resistance level. However, a fall below the $0.68096 support level would bring the $0.67286 support level into view, indicating a potential bearish trend.
The 14-period Daily RSI reading of 70.84 shows that the AUD/USD is currently in overbought territory. Typically, a reading above 70 on the RSI scale indicates selling pressure, which could intensify at the $0.68500 handle.
The 14-period 4-Hourly RSI at 65.17 suggests that the AUD/USD is heading towards the $0.68500 handle before entering overbought territory. This further supports the notion that selling pressure may increase at that level.
Overall, the AUD/USD has shown positive momentum, supported by bullish price signals from EMAs. The outcome of economic indicators from China and the US economic calendar will be crucial in determining the future direction of the Australian dollar. Investors will be closely monitoring these developments to make informed trading decisions.
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